WASHINGTON, Feb 19, 2009 (AFP) - President Barack Obama's new 275-billion-dollar mortgage plan will start working "very, very quickly," his top housing official said Thursday, after Republicans mounted attacks on the initiative.

A day after Obama unveiled the new strategy in Arizona, one of the states worst-hit by the housing crisis which helped trigger the recession, debate flared over whether it would work and help turn around the economy.

"We believe we can get help into the hands of millions of families that need it very, very quickly," Housing and Urban Development Secretary Shaun Donovan told CNN.

Sheila Bair, who heads the Federal Deposit Insurance Corporation, also said the sweeping plan, which aims to lower monthly payments to help at-risk homeowners avoid foreclosures, could make a difference as early as next month. "I believe you'll start seeing a real impact in March, with meaningful, long term, sustainable modifications," Bair told ABC.

The visibility of top Obama officials on television and the detail offered when the plan was rolled out was significant.

Markets reacted poorly last week, when Treasury Secretary Timothy Geithner unveiled his bid to rescue the debt-laden finance industry, with analysts complaining the administration offered only general concepts and not details.

Even so, Republicans and other critics marshalled arguments against the housing plan, most of which can be put into practice without congressional approval, and which forms one aspect of Obama's huge government intervention in the economy.

Senator Richard Shelby, the top Republican on the Banking, Housing and Urban Affairs Committee complained the plan "appears to help those who least need it, and doesn't help those that do."

"The biggest outrage is that the President's plan actually will use taxpayer money to pay people to do what they are already supposed to do -- pay their mortgage," he said in a statement.

"It also uses taxpayer money to pay banks to do what they should already be doing -- modifying mortgages."

The administration contends that its plan will help up to nine million homeowners, and partly targets those who are not yet on the cusp of losing their homes but could easily fall into trouble.

A 75-billion-dollar portion of the program contains incentives to lenders to lower payments by at-risk homeowners to 31 percent of their income.

The two top Republicans in the House of Representatives, minority leader John Boehner and Minority Whip Eric Cantor, sent Obama a letter with a list of "unanswered questions."

They raised concerns about whether the plan will reward banks for taking wild gambles with risky mortgages and expressed concerns people who falsified their incomes to qualify for big loans would also benefit from a taxpayer bailout.

Asked on NBC what she would say to homeowners who had played by the rules, obtained loans they could afford and always made payments, Bair suggested the economic consequences of inaction were simply too grave.

"There are moral hazard issues here," she said.

"I think we need to understand that it is our collective economic interest to get these loans restructured where we can to keep them out of the housing market and reduce that downward pressure on home prices."

On top of the 75 billion dollars in incentives to lenders, the government will put up an additional 200 billion dollars to bolster efforts by federal lenders Fannie Mae and Freddie Mac to offer affordable mortgages and bring stability to the housing market.

The hope is that mortgage holders in good standing will be able to refinance their loans at lower interest rates now available.

Previously, such lenders had been unable to take this step because plunging house prices had left them with little equity in their homes.

The National Association of Realtors praised the move, saying it would "keep mortgage rates low for all buyers and could lead to even lower rates."

The president is also set to back legislation aimed at allowing bankruptcy judges to change the terms of mortgages and lower monthly payments -- a proposal that could face Republican opposition in Congress.

Obama warned when he unveiled the plan on Wednesday that without concerted action, the housing crisis could make economic recovery impossible.

"All of us are paying a price for this home mortgage crisis and all of us will pay an even steeper price if we allow this crisis to continue to deepen," he said.